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Hershey profit beats estimates on US demand, lower ad spending

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Hershey, the maker of Hershey's Kisses and Reese's Peanut Butter Cups, reported a better-than-expected quarterly profit on Friday as demand strengthened in the United States and the company spent less on advertising and marketing.

Hershey's net sales in North America, which account for about 85 percent of total sales, rose 1.8 percent to $1.76 billion in the third quarter ended Oct. 2.

The company, which rejected a $23 billion buyout offer from Mondelez International in June, said in July it would cut costs by consolidating its supply chain and some factories in China and North America, as well as spending less on advertising.

Hershey's net income rose to $227.4 million, or $1.06 per share, in the quarter from $154.8 million, or 70 cents per share, a year earlier.

The company's costs fell 1.7 percent to $1.63 billion. Its year-ago quarter included a $31 million goodwill impairment charge related to its acquisition of Chinese candy maker Shanghai Golden Monkey.

Excluding items, the company earned $1.29 per share, beating the average analysts' estimate of $1.18 per share, according to Thomson Reuters I/B/E/S.

Net sales rose 2.2 percent to $2 billion, in line with the average analyst estimate and marking the second straight rise in quarterly sales after four quarters of no growth.

Hershey raised its 2016 adjusted earnings forecast to $4.28 to $4.32 per share from $4.24 to $4.28, citing cost savings and a slightly more favorable tax rate than expected.

Up to Thursday's close of $95.51, Hershey's shares had risen 7 percent since the start of the year.